SecondQuarter Leads Secondary Investment in Shippit’s Series B
Why we invested in a company powering ecommerce fulfilment for retailers
When we order a parcel online, it often arrives at our door-step just a few days later. Yet we rarely question how it actually got there. As consumers we have come to expect a fast and simple package delivery experience. But how that package travelled from the retailer to our front doors is rarely simple.
The order needs to be processed from the retailer’s front-end, packaged for delivery and a collection time booked with the relevant carrier. Once the package is out the door, the retailer is still responsible for the customer experience — they must track and provide updates while the parcel is en route to its end destination.
Adding to this complexity, retailers are often managing this process with multiple carriers and across different locations at the same time. And these relationships have historically been managed in disparate systems under individual agreements with each carrier. The process is complicated and adds friction to carriers, retailers and consumers.
Shippit provides software that powers a better fulfilment and delivery experience for ecommerce retailers of all sizes. It connects retailer’s storefront with multiple carriers, using automated workflows to manage the entire fulfilment process from initial order through to delivery. Shippit also empowers retailers with branded post-purchase experience solutions like end-to-end tracking updates, self-service return portals and delivery support services. It has quickly become the largest multi-carrier workflow software in Australia — and it is increasingly looking global to fulfil its ambitions to power the world’s shipping and logistics.
We are proud to be on this journey with the Shippit team, having led the secondary component of the company’s recent extension of its Series B capital raising. We provided liquidity to a number of early shareholders, and join Shippit’s existing investors Tiger Global, Tidal Ventures, EVP, Global Founders Capital, and others.
Powering the global move to ecommerce
With the amount we purchase online, it is sometimes difficult to conceive just how early we still are in a global transition to ecommerce. Some estimates suggest that just 16% of retail spending happens online.
This level grew throughout COVID, supported by new technologies that offer better digital on-ramps for both businesses and consumers. We are not alone in our belief that the pandemic caused a permanent change in the way consumers purchase. So as a ‘picks-and-shovels’ ecommerce business, we believe Shippit is one company that is uniquely positioned to benefit from this long-term structural trend.
But this wave of new ecommerce volume also created a different set of challenges. Global carrier networks are increasingly at capacity, even as consumer expectations for delivery quality continue to rise. Retailers have tried to adapt with new strategies and logistics has shifted towards micro and urban fulfilment. But this only adds further complexity, and ultimately the retailers and their customers are paying the cost through high variable shipping rates and slow delivery times.
Retailers hoping to meet the rising demand for ecommerce will need technology solutions that help them adapt to the evolving structural challenges of global logistics. We believe platforms like Shippit will become increasingly important in order for these businesses to meet customer expectations and remain competitive.
Building a network at scale
Shippit is building a network that brings together the disaggregated supply of carrier capacity and retailer demand.
Carriers need to be able to maximise their network utilisation — the amount of their fleet or warehouses that are being used. Retailers want to provide transparency and a better experience for their customers. Shippit is able to satisfy both sides of this network through its marketplace offering.
By connecting directly with its large base of retailers, Shippit provides carrier networks with a valuable distribution channel. And by offering direct integrations into these carriers, Shippit can offer retailers pre-negotiated pricing, better workflows and a consistent user experience.
The value proposition will continue to improve as this network grows stronger with more carrier integrations and more retail customers. We see tremendous value for this network in some of Shippit’s overseas target markets, where supply and demand of carrier capacity is even further dislocated.
Relentless innovation
Co-founders Will and Rob are on an ambitious mission to create the global network that brings people and goods together in the leanest way possible.
Shippit quickly became the largest booking platform for the retail industry in Australia. And in the process, it accumulated vast amounts of data on how packages move around: which carriers have the best performance, along which routes, how volume impacts timing and price, etc. This data is spread across the tens of millions of shipments it currently processes through its platform each year.
The company is leveraging this data to build a virtual logistics network that is open and connected. This new network, called Lyne Direct, will seek to optimise existing logistics infrastructure by connecting carrier networks together in order to help retailers select the most efficient route.
The supply of carrier capacity has always been inelastic. Shippit’s vision to open these previously isolated networks to create an integrated logistics system has the potential to revolutionise the industry. It would allow its customers to have a low-cost and reliable delivery option that reduces waste and is unconstrained by the limitations of individual carrier networks.
As the Shippit and Lyne Direct products grow, they will accumulate more data that can be used to further enhance the products. This will make each better, stickier and harder to displace.
